Global fintech firms are entering the Indian market
The prepaid card market (value terms) in India is expected to record a CAGR of 29.7% to reach US$134.59 billion by 2027, increasing from US$35.69 billion in 2022.
It had increased at a CAGR of 18.4% during 2018-2022, according to the “India Prepaid Card and Digital Wallet Business and Investment Opportunities” by ResearchAndMarkets.
Global fintech firms are entering the Indian market with their prepaid card offering to tap into the lucrative SME segment, said the report.
The robust digital payments infrastructure, coupled with a high smartphone and internet penetration rate, has driven the prepaid card market in India, the report said on 29 Mar 2023.
“Government policies, the flourishing fintech sector, and the global pandemic outbreak has assisted industry growth in unprecedented ways,” said the report.
In H2 2022, the country recorded over 40 billion digital transactions.
The Unified Payments Interface (UPI) transaction volume and value have grown significantly year over year in Q3 2022. Mobile payment instruments, such as PhonePe, Google Pay, and Paytm, are leading the UPI transaction value and volume in the country.
The swift adoption of digital payments can be seen with each passing quarter in India, and the trend is expected to further continue from the short to medium-term perspective.
Over the next three to four years, the growth in online shopping is expected to further accelerate the growth of the prepaid card market in India.
PhonePe and Google Pay stand to gain from the extension of the market share cap deadline to December 2024, said the report.
To address the risks and protect the UPI ecosystem in India, the National Payments Corporation of India (NPCI) announced the market cap rules, thereby limiting any single prepaid payments instrument provider to process over 30% of UPI transactions in a month.
However, taking into account the present usage and the potential future of UPI, NPCI has deferred the implementation of the market cap several times. In December 2022, NPCI again extended the market share cap deadline to December 2024.
Tokenization can accelerate the digital payments adoption and prepaid card market growth in India, according to the report.
India already has a robust digital payments infrastructure, which has played a pivotal role in the growth of the prepaid card market over the last three to four years.
The prepaid card industry is projected to further growth, as India is poised to gain significantly from the proliferation of tokenization.
Tokenization offers two key benefits, including payment security and an enhanced checkout experience. With the tokens flowing through the payment systems without disclosing sensitive customer data or allowing payment aggregators or merchants to store customer data, consumers are better secured.
As a result, more and more consumers are projected to adopt digital payments from the short to medium-term perspective in India. fiinews.com
